PAYE tax

[zit]

Hi all,

I am enrolled under my company name in SARS and i used to get IRP5 every year . My employer pay PAYE tax for me.

example:

If my salary is 18k and my employer pays PAYE tax for 15k (15k reflect in payslip) and pays 3k separately in my account without the tax.

who is in trouble now . My employer or me?

Thanks in advance guys...

[Dave A]

One way or another, probably both of you

Your employer is under-declaring (which will attract a penalty and interest at the very least) and you're underpaying (expect a tax bill + plus penalties + interest too perhaps).

Is there no chance of there being valid reasons why your employer is paying that R3k, such as reimbursement of provable expenses incurred on their behalf?

[Blurock]

I know of a similar case where the employer was underpaying SARS.

The outcome was that the employer had to pay the outstanding tax as well as penalties for so many years. He was also prohibited from reclaiming the tax and penalties from the employer.

[Dave A]

He was also prohibited from reclaiming the tax and penalties from the employer.

...employee?

[Blurock]

...employee?

Employee.

[zit]

Thanks foe the reply guys...

Employer have to pay the fine or the employee ?

[BusNavig8]

Everything has to be declared on the biannual recon. If it is not then SARS will come down on the Employer like a ton of bricks. The bigger companies have actual SARS consulants allocated to them for any queries and problems and will also act as "watchdogs". Anything of a reimbursive nature, the Act is very strict on and there are provisions made for them and they need to be reflected in the payroll and accounted for on the IRP5 at year end and in most cases need to be justified. I would get paperwork to cover myself regarding this payment. the money just is not worth the risk.

If there is an audit (Engagement Letter) the employee can face a 15 year criminal sentence as it is a criminal offence and up to 200% penalty for underdeclaring income. IOW the money that is paid into the bank account must be disclosed if it is not reflected on the IRP5. Not a good place to be in either party, the employer or the employee.

In terms of the Act, as soon as there are 3 or more persons involved, SARS see it as a syndicate!. I deal with the Criminal prosectutions unit I know how they deal with cases. (I was actually asked to join them as a forensic auditor a few years back). This obvioulsy is only used extreme cases.

I would not play around with SARS at the moment, they are hot on the heals of taxpayers!

[BusNavig8]

Remember there's tax avoidance and there's tax evasion - one legal and one illegal!

[zit]

One way or another, probably both of you

Your employer is under-declaring (which will attract a penalty and interest at the very least) and you're underpaying (expect a tax bill + plus penalties + interest too perhaps).

Is there no chance of there being valid reasons why your employer is paying that R3k, such as reimbursement of provable expenses incurred on their behalf?

Company mentioned that 3k as petty cash usage and sundries

[Dave A]

Just remember these need to be provable expenses. The company would need to have till slips etc.

[BusNavig8]

In my opinion, if the 3K is reimbursive then it needs to be disclosed as a reimbursive item on the IRP5. An effective way to get around this is to issue a separate IRP5 with the 3606 code and that way in terms of Sec 23 (m) the "slips" would be allowable and create a tax neutral event that is disclosed. Gone are the days where these types of transactions are allowable.